The Indian steel industry, which was riding the commodities boom over the past four years, is currently grappling with slowing sales in international markets and weak demand locally. Tight availability of iron ore has already pushed mid-sized steelmakers to down shutters in some states.
However, Essar's close collaborations with group construction companies and new production processes will bring down their cost of production of steel to $750 a ton compared with global benchmark of about $1,300 for a plant of similar size.
The facility includes a 10-million-ton (mt) steel plant, a pellet plant and a beneficiation plant of 12 mt each, a slurry pipeline and service centres.
On April 9, Essar Steel commissioned the pellet making facility in Odisha. The company will use ore dumps in the state to convert them into usable lumps. Essar already has an 8-mt pellet plant in Vizag.
Essar Steel buys the bulk of its iron ore through offtake agreements with state-owned NMDC, private miners in Odisha, and captive mines in Jharkhand and Chhattisgarh.
Essar Steel has commissioned a 6-million-tones-per-annum (mtpa) pellet unit at Paradip in Odisha, in the first phase of the 12-mtpa plant to be ready in 2013. Once completed, the facility would be India's largest pellet plant. In January, it had completed the expansion of its Hazira facility, making it the country's largest single location flat steel maker with 10 mtpa capacity. The integrated facility includes a 12-mtpa iron ore beneficiation plant at Dabuna and a 253-km slurry pipe line connecting Dabuna and Paradip. It will reduce the operating costs per ton and improve the cost competitiveness. The slurry pipeline apart from being a cost reduction initiative is also the most environment friendly way of transporting raw material for the pellet plant.
The pellet plant in Paradip along with Vizag's capacity of 8 mtpa will fully secure the iron ore requirements for Essar Steel in India.
“Odisha is emerging as a big destination for investments in the country and Essar is committed to be a part of this growth story. For Essar, this pellet plant is a crucial piece in its quest to achieve complete vertical integration,” Essar Group chairman Shashi Ruia said.
Essar Steel is setting up an iron ore beneficiation plant at Dabuna to upgrade the quality of low-grade iron ore fines from 54 percent Fe content to over 63 percent Fe content. The iron ore fines will then be supplied through 253 km slurry pipe line from Dabuna to Paradip.
Essar Steel's managing director and chief executive, Dilip Oommen, and Essar Steel's head — Paradip Complex, Odisha, Pramod Gupta, spoke to Steel Insights during a plant visit at Paradip in Odisha.
What are projects that have been undertaken in Paradip and Vizag?
Gupta: The project in Vizag includes an 8-mtpa benefication plant at Kirandul, 267 km slurry pipeline and a port-based 8-mtpa pellet plant. The project in Paradip includes a 12-mtpa beneficiation plant at Dabuna, a 253 km slurry pipeline and a port-based 12-mtpa pellet plant.
What are the highlights of the first phase of the pellet plant commissioned
Gupta: The plant is designed to use low-grade iron ore fines. The transportation mechanism through the slurry pipeline is an innovative and environment friendly mechanism that we have taken up. The plant will benefit the nation and Odisha by using resources within the country. The project is planned with the ability to use low-grade iron ore fines that are unused and not easily consumable.
The other unique features include Fluxed pellet production for use in multiple iron making technologies — Corex, Blast Furnace and Direct Reduced Iron, slurry filtration by filter press and air drying of filter cake, higher capacity mixer having improved features and all buildings are independent and have a modular design. The project in Paradip will have 120 mw of dedicated power capacity.
What are the technologies being undertaken for the pellet plant?
Gupta: There are three technologies available — shaft furnace, travelling grate and grate kiln. We have opted for Travelling Grate, which has the following advantages:
- No dust and chip generation, which would overload the de-dusting system and cause uneven cooling.
- Easy adaptation of temperature profile to raw material requirements and superior process flexibilty.
- Stationary refractory - reduced maintenance cost, increased plant availability.
- Direct Recuperation Principle - reduced overall energy consumption.
Some part is done through grate kiln technology, which has the following advantages:
- Higher CCS of the product.
- Uniform pellet properties with lower standard deviations.
- Lower fuel consumption, about 5-10 percent less, because of non-usage of Hearth Layer.
- Good reducibility and sufficient mechanical strength during reduction are two most important properties demanded from pellets by the BF / DRI / Corex operations.
What will be the input requirement for the plant?
Gupta: Around 14 litres of furnace oil, 15-16 kh per ton of met coke and 15-16 kg of limestone is required for the plant.
By when will the slurry pipeline be commissioned?
Oommen: By the end of June. Even then, some minor things like the actual beneficiation plant will remain.
But isn't pellet a high-cost business? During downturns in the steel
industry, such plants are the first to be shut down.
Oommen: Once you get the fines, what do you do with those? Either pelletise or use in sinter. Or, there are some newer processes today that are using fines to convert those into iron. But why should a pellet plant be really a waste? Already, we are getting so many calls from interested companies who want to buy our excess pellets. Since we are short of pellets as of now, we have said no. But yes, you are right. Usually, $30 per ton is the world benchmark for pellet production, and our is lower.
You will be producing 20 mt of pellets by 2013, but your need is 15
mt. Will the excess be sold in the open market?
Oommen: The primary objective is to make sure that the investments do not go waste. Securitisation of raw materials for the Hazira plant is of prime importance. It is always good to have extra capacity than run short. If there is extra production beyond the requirement of Hazira complex, yes, it will be sold.
Your slurry pipelines have been in focus for a long time. These have
been rendered useless by insurgents on a couple of occasions. How would you
secure the Paradip pipeline?
Oommen: There are two slurry pipelines. One is from Kirandul to Vizag, which has been attacked by insurgents. We have mitigated risks to a certain extent by moving the material by rakes. Also, we have put up some facilities like an additional pressure filter in Vizag to bring the capacity of the pellet plant quite close to the total capacity, even without the slurry pipeline. As far as the Odisha one is concerned, what have we learnt? One is we have laid the pipeline closer to highways, so that it is more accessible. Two, we have set up a grinding facility in Paradip. This means if there is an interruption in the slurry pipeline, pellets can still be produced by getting fines to Paradip to a capacity of 4 mt.
What are your plans for captive iron ore mines?
Oommen: We do not have captive iron ore mines. We are dependent on NMDC. It takes care of the 8 mt requirement at Vizag. As far as Odisha is concerned, we have tied up with private miners. In act, an estimated 200 mt of iron ore dumps are available in Odisha alone. Also, we have applied for mines. We have got prospecting licences (PL) for mines in Chhattisgarh and Jharkhand. We will focus on the mines for which we have got PL, especially in Chhattisgarh. We are working on it. Obviously, there are issues in Chhattisgarh because of insurgent issues. We are working with the state government, which is coming a long way to help us.
What kind of benefits will you see once the expansion projects are over?
Oomen: When all expansions get complete in 2012-13, we will see a big drop in costs. And, we will have an entire range of products, we will make significant earnings before interest, taxes, depreciation, and amortization (EBITDA). We will be the lowest cost or the first quartile producer of steel. We will be making an EBITDA of at least $130-140 a ton.
Do you have plans to set up a steel plant in Odisha?
Gupta: Yes, we have a memorandum of understanding with the Odisha government for setting up a 6 mt steel plant subject to state support for land acquisition. We have also applied for captive mines in the state.